1. What is Sarbanes Oxley Act?

The U.S. has a statute known as the Sarbanes-Oxley Act of 2002. On July
30 of that year, Congress passed laws to assist shield investors from businesses
that provided false financial information. Its official name is the SOX Act of 2002,
and it demanded substantial updates to current securities laws as well as severe
extra punishments for violators. Financial scandals involving publicly listed
businesses including Enron Corporation, Tyco International plc, and WorldCom
in the early 2000s led to the creation of the Sarbanes-Oxley Act in 2002. The
well-publicized scams undermined investor faith in the reliability of company
financial statements, which caused many to call for a revision of the regulations'
long-standing requirements.

The Securities Exchange Act of 1934 and other laws implemented by the
Securities and Exchange Commission, as well as the regulations and
enforcement methods detailed in the Sarbanes-Oxley Act of 2002, altered or
enhanced already-existing laws governing the regulation of securities (SEC). The
new legislation included changes and improvements in four key areas, including
corporate accountability, heavier penalties for crimes, accounting regulation, and
new protections.

The primary goals of the Act were to control internal audits, financial
reporting, and other business processes at publicly listed corporations. All
businesses, even for-profit and private businesses, must abide by certain
restrictions, nevertheless. The Act also included penalties for failing to follow its
rules. Corporate governance and financial disclosure are important aspects of
Act compliance.

2. What does the Sarbanes-Oxley Act require companies to do?

All financial reports must contain an Internal Controls Report in

accordance with the Sarbanes Oxley Act. This demonstrates that a corporation
has correct financial data and that there are sufficient procedures in place to
 protect that data. It is also necessary to submit year-end financial disclosure
filings. When conducting a Section 404 audit, a SOX auditor must evaluate
controls, policies, and processes. Internal policies and processes must be able to
be audited using a control framework like COBIT in order to pass a SOX audit.
The ISACA COBIT framework was developed to fill the critical gap between
technological challenges, business risks, and control needs. The quality, control,
and dependability of information systems may be ensured by implementing
COBIT in any firm from any sector. An audit record of every access and action to
sensitive corporate information must be provided via log collecting and
monitoring systems.

By safeguarding workers of publicly listed businesses or their subsidiaries

who disclose unlawful activity, Sarbanes-Oxley also promotes the revelation of
corporate fraud. The U.S. is permitted to do so under Section 806 of the
Sarbanes Oxley Act. The Department of Justice is also given permission to bring
criminal charges against people who are responsible for the retaliation. The
Department of Labor is required to safeguard whistleblower allegations involving
employers that engage in retaliation.

3. What are the main provisions of the Sarbanes-Oxley Act?

Section numbers are used to categorize the Sarbanes-Oxley Act's

provisions:

Section 302: Public corporations are required to submit periodic reports to

the Security and Exchange Commission. The information in these reports must
be individually verified to by top management, who are also in charge of creating
internal data controls.

Section 404: A section on internal control system must be included in the

annual financial reports to examine overall performance and to disclose any
flaws that are found. The evaluation of the internal controls by administration
must be supported by certified external auditors.
 Section 409 states that the public must be informed right once of any
significant changes to the company's activities or financial standing.

The laws governing punishments are found in Sections 802 and 906. They
prohibit changing documents in an effort to obstruct an inquiry and restrict
anybody from certifying a false or fraudulent financial report. We'll go into more
depth about these provisions later in the essay.

The 404 is regarded as the most difficult and complicated of these

portions. Increasing technological systems must not only be installed to ensure
data security and integrity, but also corporate management and independent
auditors must periodically evaluate and record the effectiveness of such systems.

4. How it affects the US businesses until today?

The Sarbanes-Oxley Act of 2002 was hastily approved by Congress with

the goals of reducing fraud, enhancing the accuracy of financial reporting, and
regaining the trust of investors. Numerous businesses in the United States have
started to standardize and consolidate important financial activities (typically in
shared service centers), get rid of duplicate information management, connect
various platforms, decrease data definition errors, automating manual tasks,
lessen transmissions, better integrate distant offices, better integrate
transactions, more quickly train workers, expand responsibilities for controls, and
get rid of unneeded control system. Additionally, SOX-inspired practices are
starting to be used as a model for observing other legal requirements. The
company focuses on control environment because they believe that it will help
the company to ensure their company defence because for them controls
themselves are the second and third lines of defense, not the first. Some CEOs
believe that they must connect every decision to the bottom line.

Personally business owners are also impacted by a few Sarbanes-Oxley

regulations. For instance, there are fines and up to 20 years in jail for willfully
deleting, changing, or forging documents with the aim to hinder or influence a
 federal agency inquiry or a federal bankruptcy action. Whistleblower protection
also applies, and it is illegal to retaliate against someone who gives a law
enforcement official information about a potential federal crime. This infraction
carries a maximum 10-year jail sentence.

5. How it is related to business ethics/code of ethics.

To safeguard shareholders, discourage corporate fraud, and stop

misbehavior, including retribution against whistleblowers, SOX was implemented in
the wake of corporate malfeasance by big publicly traded businesses. Generally
speaking, organizations covered by SOX's most well-known provisions, such as its
financial reporting requirements, are also registered under the Securities Exchange
Act of 1934 as issuers of securities. A code of ethics is a set of written principles that
are ostensibly intended to prevent misconduct and advance they have ethical
behavior, includes resolving conflicts of interest between personal and professional
ties that are real or perceived, complete, fair, accurate, timely, and intelligible
disclosure in periodic reports that the covered company is obligated to file, obeying
all applicable laws, rules, and regulations and responsible for following the code.

6. Explain its connection to strategic management.

Setting policies, processes, and goals in order to increase a company's or

organization's competitiveness is the process of strategic management. Change
is a constant in business, thus in order to satisfy customers, the company must
adapt to the changing environment. The Sarbanes-Oxley Act also enables
businesses to identify opportunities for operational development. In order to
avoid the Sarbanes-Oxley Act's negative effects on both small and large
organizations, corporations are also required to implement it. The SOX's Section
404 establishes a framework for routine evaluations of internal control over
financial reporting and requires public accounting firms doing the audits to review
the report on the evaluation. The Sarbanes-Oxley act and strategic management
are important because it provides greater oversight for corporations.
 REFERENCES

Wagner, S. Dittmar, L. (2006). The Unexpected Benefits of Sarbanes-Oxley. Retrieved from.

https://hbr.org/2006/04/the-unexpected-benefits-of-sarbanes-oxley

Kenton, W. (2022). Sarbanes-Oxley Act: What It Does to Protect Investors. Retrieved from.
https://www.investopedia.com/terms/s/sarbanesoxleyact.asp

 Fruhlinger, J. (2020). The Sarbanes-Oxley Act explained: Definition, purpose, and provisions.
Retrieved from.
https://www.csoonline.com/article/3598292/the-sarbanes-oxley-act-explained-definition-purpose-and-
provisions.html

Cino, R. (2005). All Employers Should Consider the Impact of the Sarbanes-Oxley Act on Corporate
Compliance and Ethics Programs. Retrieved from.
https://www.jacksonlewis.com/resources-publication/all-employers-should-consider-impact-sarbanes-
oxley-act-corporate-compliance-and-ethics-programs